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Retention payments in the construction sector

The Finance Committee and the Economy, Infrastructure and Skills Committee of the National Assembly for Wales agreed to undertake a joint inquiry into retention payments in the construction industry.

The retention system has featured in the construction sector for over 100 years and is a contractual practice originally introduced to provide security against defective work or the insolvency of construction firms.

Most building contracts and sub-contracts entitle the employing party or client or a contractor to keep a percentage, typically around 5%, of the value of the work carried out until completion or making good of defects.

Research by the UK Government showed that unjustified late and non-payment of retention monies was a significant issue for some contractors. The research also showed that delays in paying retentions become more significant further down the supply chain.

The Committees examined the use of retentions in Wales, and the UK more widely. The inquiry consider the following:

  • to what extent retentions are an issue for companies based and/or operating in Wales, including how issues might differ through the supply chain;
  • whether there are any benefits to the use of retentions;
  • alternatives to the use of retentions and what role the Welsh Government could play in developing and delivering those alternatives.

Following the evidence session the committees jointly wrote to the Minister for Economy, Transport and North Wales

Letter from the Minister for Economy, Transport and North Wales

Evidence Session

Date, Agenda and Minutes

Transcript

Video

1. Professor Rudi Klein, Barrister, Head of Specialist Engineering Contractors’

(SEC) Group

Catherine Griffith-Williams, National Executive Officer for Wales, SEC Group

Kyle Spiller MCIOB, Director of SAM Drylining Ltd (representing Chartered

Institute of Building Wales)

Ifan Glyn, Senior Hub Director/Wales Director, Federation Of Master Builders

 

17 October 2019

Evidence Session 1

Watch Evidence session 1 on senedd.tv

 

Business type: Committee Inquiry

First published: 01/10/2019

Decision due: Meeting Date by Economy, Infrastructure and Skills Committee, Finance Committee

Documents

 

 

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